PEFINDO assigns “idAA-(sy)” rating to PT Elnusa Tbk’s Sukuk Ijarah

(June 22, 2020)--PEFINDO has assigned its “idAA-(sy)” rating to PT Elnusa Tbk's (ELSA) Sukuk Ijarah Year 2020 up to IDR1.5 trillion. The issuance proceeds will be allocated to support the construction of depos for ELSA's downstream business and to finance the procurement of equipment needed for ELSA's upstream business such as well service and seismic service. PEFINDO has also affirmed ELSA's corporate rating at "IdAA-". The outlook for the corporate rating is "Stable".

An obligor rated id.AA differs from the highest rated obligors only to a small degree, and has a very strong capacity to meet its long -term financial commitments relative to that of other Indonesian obligors. The Minus (-) sign indicates that the rating is relatively weak within the respective rating category.

The suffix (sy) means the rating mandates compliance with Islamic principles.

The rating reflects ELSA's strong business synergy with PT Pertamina (Persero), strong diversification and presence in the oil and gas services business, and strong cash flow protection measures and liquidity. The rating is constrained by the volatility of the oil and gas sector and the Company's exposure to investment risk.

The rating may be raised if ELSA significantly strengthens its business position, validated by significant growth in revenue and earnings, benefitting from potential oil and gas services revenue, while maintaining its conservative capital structure and strong cash flow protection measures on a sustained basis. The rating will be lowered if the Company incurs higher debt than projected to finance its business expansion plans, and if we view a decline in support from and ownership by its Parent. The rating could also be under pressure if prolonged current Coronavirus Disease (COVID-19) outbreak adversely affects the Company's business operation, such as project delays or cancellations. Potentially lower service fee due to significant drop of oil and gas prices, resulting in lower revenue, cash flow, and/or profitability, could also trigger the rating downgrade.

Established in January 1969, ELSA is engaged in integrated upstream oil and gas services, upstream oil and gas support services, and logistics and distribution services related to the downstream oil and gas sector. At the end of 2019, Pertamina - the state-owned and biggest oil and gas company in the country- was its major shareholder with a 41.1% stake. The remaining shares were owned by Pertamina Pension Fund (14.9%) and others (44.0%, including the public with ownership stakes below 5% each). (ends)